The Hindu Business Line : FIIs sell $3.2-b worth equities in January alone

Money outflow
Registrations with SEBI rise but FIIs will wait for opportune time to invest in the market
FIIs needed money to set their books right elsewhere so they booked profits by selling in China, Thailand and India among other markets.

Ravi Ranjan Prasad
K.S. Badri Narayanan

Mumbai/Chennai, Feb. 5 In the span of little more than a month, foreign institutional investors (FIIs) sold about $3 billion worth of equities in the Indian market.

This is in contrast to their total net investments of $17.23 billion in India in 2007.

In January alone, FIIs sold to the tune of $3.2 billion. Between January 16 and 24 — when the Indian market witnessed the sharpest fall — FIIs sold shares worth $3.65 billion. “FIIs are likely to remain cautious, I don’t expect them to buy in a hurry, they would like to wait for an attractive level before entering the market in a big way,” said Mr Vijay L. Bhambwani, Chairman, Bhambwani Securities (P) Ltd said.

“Optimism about India also fell to its lowest level since last June,” a recent survey of Asian fund managers by Merrill Lynch on emerging markets said.

The caution on the part of FIIs was visible; they were net buyers by Rs 311.78 crore on Tuesday as per provisional BSE & NSE data.

The SEBI data for February 4 showed net buying by Rs 3,810.70 crore ($944.6 million).

Registration rises

Meanwhile, the number of FIIs registered with the market regulator SEBI moved up from 1,219 as on December 31, 2007 to 1,279 as on January 29, 2007. The total number of FIIs registered as of December 31, 2006 was 993.

The FII sub-accounts have jumped from 3,644 as on December 31, 2007, to 3,796 now.

After the participatory note unwinding, a number of new FIIs had registered with SEBI. Though the number has gone up, allocation and deployment of funds may take some more time, said Mr Nipun Mehta. Co-Founder & CEO, Unitis Tower Wealth Advisors, a private asset management firm.

“Fresh FII registrations didn’t mean much, they would like to wait for opportune time to invest in the market and the still don’t have the comfort level,” Mr Mehta said.

Mr Harjit Singh Sethi, CEO, Almondz Capital Market, said, “FIIs needed money to set their books right elsewhere so they booked profits by selling in China, Thailand and India among other markets.”

The domestic mutual funds, however emerged as a counterbalance to the FIIs in times of big sell-off, bought equities worth Rs 7,702 crore in January against buys worth Rs 3,024 crore in December 2007.

Total FII exposure to Indian equities market as on December 31, 2007 was $66.32 billion.